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Tech Swings Dalal Street

The battered technology rebound brought cheers this Diwali and helped the market attain its pre-September 11 level. However, the bulls are not back yet ….

Diwali brought cheers to the markets as well. In three days only, the market gained 3 per cent on the Sensex and Nifty to attain their pre-September 11 levels. However, the gain was only notional based on a low volume. The key change in the market mood was a gain for large and mid-cap technology stocks. Talks of Infosys expanding its US operations raised hope for the tech sector. One the other hand, cement stocks jittered during the week as the fall in cement prices and SEBI's decision to investigate the spurt in Larsen & Toubro scrip contributed to the weakness.

This week the disinvestment ministry completed the sell-off of ITDC hotels for Rs 20 crore and laid the blue print for its petrochemicals PSU-IPCL. In the first phase 26 per cent stake in the company along with the management control will be sold out to the strategic partner. And by scheduling the balance 25 per cent over the next 1-5 years, the ministry is hopeful of better realisation, should first stake holder improves the company valuations. Close on the heels of VSNL disinvestment, government's decision to lower entry barriers in the international telephone services brought down the VSNL scrip by 13 percent during the week. These services account for 90 percent of the ISP giant's revenues and the move will hinder its valuations when put up for sale. Now that SEBI has given in to ministry's demand of standard pricing norm, government's success in disinvestment within this fiscal will guide the long-term movement of markets.

Despite the concerns over corporate and economic recovery towards end and profit booking, the US markets gained 2.7 percent on the Dow Jones and 3.7 percent on the Nasdaq.

Cautious optimism is beginning to creep in the system, triggered by the low valuations and improved sentiments in the US. However, the market is likely to show selectivity with its momentum, in the absence of any powerful propellant to drive the broad-based market.